Alternative Funds 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

CHAMBERS GLOBAL PRACTICE GUIDES

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editor Elizabeth Shea Fries Sidley Austin LLP

Global Practice Guides

Alternative Funds Contributing Editor Elizabeth Shea Fries Sidley Austin LLP

2025

Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by Elizabeth Shea Fries, Sidley Austin LLP p.4

LUXEMBOURG Law and Practice p.178 Contributed by Luther Trends and Developments p.193 Contributed by Luther

AUSTRALIA Law and Practice p.9

Contributed by Holding Redlich Trends and Developments p.28 Contributed by Holding Redlich

MAURITIUS Law and Practice p.199 Contributed by Bowmans

BRAZIL Law and Practice p.35

NORWAY Law and Practice p.213 Contributed by Wikborg Rein Advokatfirma AS Trends and Developments p.230 Contributed by Wikborg Rein Advokatfirma AS POLAND Law and Practice p.237 Contributed by PwC Legal Business Solutions

Contributed by Darmont Advogados Trends and Developments p.53 Contributed by Mattos Filho CANADA Law and Practice p.58 Contributed by Stikeman Elliott LLP

CAYMAN ISLANDS Law and Practice p.73 Contributed by Appleby CHINA Law and Practice p.88

PORTUGAL Law and Practice p.251 Contributed by EY Law – Sociedade de Advogados, SP, S.A.

SINGAPORE Law and Practice p.268 Contributed by Shook Lin & Bok LLP SOUTH KOREA Law and Practice p.285 Contributed by Bae, Kim & Lee LLC

Contributed by Fangda Partners Trends and Developments p.102 Contributed by Fangda Partners

GERMANY Law and Practice p.110 Contributed by POELLATH Trends and Developments p.133 Contributed by Willkie Farr & Gallagher LLP

SWITZERLAND Law and Practice p.297 Contributed by Homburger USA Law and Practice p.314

GREECE Law and Practice p.139 Contributed by Machas & Partners ISRAEL Trends and Developments p.154 Contributed by Vinograd & Co.

Contributed by Winston & Strawn Trends and Developments p.330 Contributed by Winston & Strawn USA – NEW YORK Trends and Developments p.338 Contributed by RPCK Rastegar Panchal

JAPAN Law and Practice p.158 Contributed by Mori Hamada & Matsumoto Trends and Developments p.174 Contributed by Simpson Thacher & Bartlett LLP

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INTRODUCTION Contributed by: Elizabeth Shea Fries, Sidley Austin LLP Sidley Austin LLP has a premier, global practice in structuring and advising investment funds and advis - ers. The investment funds practice group serves vir - tually every type of investment fund and investment manager, as well as many other market participants. The group has approximately 130 corporate, securi -

ties and derivatives lawyers dedicated to investment funds, investment management and derivatives work worldwide, with lawyers practising in New York, Chi - cago, Boston, Dallas, Los Angeles, San Francisco, London, Hong Kong, Palo Alto and Singapore.

Contributing Editor

Elizabeth Shea Fries is the managing partner of Sidley Austin’s Boston office, global leader of the firm’s market-leading investment funds practice and a member of the firm’s executive committee. Liz provides

management and other financial businesses, financial services mergers and acquisitions, innovative investment services and products, alternative investments, fiduciary issues and compliance matters. Liz serves on the board of the Managed Funds Association, has authored numerous articles, is a regular speaker at industry seminars and has been recognised by various organisations including Chambers.

clients strategic advice on a broad range of transactions, business and investment structures, and regulatory matters. She has particular experience in creating and structuring asset

Sidley Austin LLP 60 State Street 36th Floor Boston, MA 02109 USA Tel: +1 617 223 0300 Web: www.sidley.com/en/us

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INTRODUCTION Contributed by: Elizabeth Shea Fries, Sidley Austin LLP

A Global Overview of Alternative Funds Alternative funds – private equity, hedge funds, pri - vate credit, venture capital, real estate, infrastructure and impact‑oriented vehicles – increasingly play a central role in global investing. 2025 is shaping up to be a good year for alternative funds. While interest rates have remained on the high side, the prospect of future cuts brings a more favourable environment for deal-making and higher asset valuations. A focus on decreasing regulatory burdens, at least in the United States, has also stimulated deal-making. As exits become more feasible, more capital flows into alter - native funds. The public markets are becoming more concentrated in a handful of well-known companies, which reduces diversification and can increase volatility. As a result, investors continue to favour the prospect of diver - sification, long-term value, and exposure to private investments and strategies available through alterna - tive funds. Institutional investors, high net worth inves - tors and global regulators have a growing interest in hybrid/evergreen/semi-liquid funds as a means to such opportunities but are also mindful of the risks. Meanwhile, technology is advancing with rapid devel - opments in artificial intelligence (AI), tokenisation, dig - itisation, sustainability and other areas. Regulators around the world are striving to stay ahead of these trends, through both the development of new regula - tion and the pursuit of enforcement matters. These trends continue to spur sponsors and inves - tors in alternative investments to be nimbler and more creative, but also more resilient, and they require (i) an increased focus on a strong compliance culture, (ii) careful attention to tax and legal structuring, (iii) engagement on valuation and liquidity issues, and (iv) clear communication and transparency with investors and regulators. For legal advisers in particular, the task is increasingly complex. Global economic and political context The theme of 2024 was a gradual focus on interest rate cuts, leading to a welcome reversal of the trend of higher costs of capital/financing in recent years and hoping for a thaw in the market for exits. In 2025, the thaw did materialise, and at the same time geopolitical

risks and trends have morphed, so they are not mere - ly influencing markets but are causing a realignment of the global power structure and global economy. Globalisation and free trade is giving way to tariffs, trade disputes, nationalism, conflict and competition between nations. In the meantime, we are experienc - ing uncertainty and instability which require rethinking traditional investment methodologies and products. It is no surprise, then, that the hottest topics include AI, digitisation/tokenisation, and retailisation of alterna - tive funds. As these hot topics emerge, global regulators are striving to keep up, focusing more on compliance and enforcement as deregulation takes effect Neverthe - less, potential deregulation in the USA may help shift to create new opportunities. We have already seen the United States Securities and Exchange Commis - sion (SEC) staff provide guidance facilitating private placements with large minimum investments instead of requiring burdensome verification of an investor’s financial position and loosen a prior staff policy limit - ing certain registered funds’ ability to invest in private funds. Also, we have an Executive Order directing the exploration of the use of alternative investments in retirement accounts and proposed legislation (not for the first time) to open up the standard for being an “accredited investor” eligible to participate in pri - vate placements. In the UK and EU, there is also a re- examination at the legislative level of the “professional investor” criteria to allow greater access for high net worth or mass affluent investors. In the meantime, as in the USA, certain sponsors are also using retail products such as the Luxembourg Part II UCI Fund or European long-term investment fund (ELTIF). In APAC, sponsors are facing increased scrutiny of their mar - keting practices for private offerings due to the focus on expanding the universe of investors and increasing investor demand for these products. Regulators will need to get ahead of these trends to help establish appropriate but not overly burdensome guardrails as alternative investments and strategies become more broadly available. Several bright spots The rebound in the private equity market has allowed funds to deploy their “dry powder”, particularly in growth-oriented or undervalued assets. Sponsors in

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INTRODUCTION Contributed by: Elizabeth Shea Fries, Sidley Austin LLP

both private equity and venture capital are not only investing in AI but also deploying AI strategies in their portfolio companies to be more operationally efficient and enhance decision-making. AI is also driving a need for more energy, with increased investment in infrastructure and in data centres that have a huge appetite for energy, power generation and related digital infrastructure. To the extent that interest rates and therefore borrowing costs lower, or inflation increases, we can expect to see more real estate investing and capital investment in the infra - structure sector. Credit funds, particularly those engaged in direct lend - ing, real estate and infrastructure debt, continue to grow in size and stature, while many benefit from a dif - ferentiated strategy. Global regulators are increasingly focused on “non-bank financial institutions”, which could curtail investment activity and limit access to financing especially outside of the USA. The credit funds space has led the development of the hybrid or evergreen structure, which is a deliberate structur - ing to match the liquidity of the fund with the liquidity of the portfolio assets. In the USA, fund structures may include those electing to be treated as “business development companies” (BDCs) or “interval funds” under the Investment Company Act of 1940 (“40 Act”), each of which presents a tax-efficient structure for non-US investors. In the case of mortgages and other real-estate-related debt, non-traded real estate investment trusts or even interval funds under the 40 Act provide similar liquidity and tax efficiency. The secondary market for private assets is also strong, with continuation funds and GP-led secondaries pro - viding much-needed liquidity for investors with long- held assets. Notably, secondaries are expanding from the private equity, real estate and infrastructure sec - tors to include more credit, venture and other assets. Last but not least, hedge funds have seen the strong - est inflows of the last decade, and their strategies have demonstrated that they can benefit from market dislocations and uncertainty. Global trade and rates uncertainty have provided macro funds opportunities that have been harder to capture in recent years, and in general hedge funds have benefited from the abil -

ity to hedge in volatile markets (including with long/ short strategies). With the high returns in public equi - ty markets, hedge funds may represent an attractive opportunity for uncorrelated returns with downside protection. Artificial intelligence, technology and blockchain/ tokenisation In addition to driving certain investment themes, AI is becoming more commonly used by managers for their own operations and within their portfolio compa - nies. It is an area in which managers need to keep a watchful eye on compliance and regulation, particu - larly with increasing focus on the regulation of cross- border investing and concerns about cybersecurity and privacy. Technology is also the driver for many fintech plat - forms that are democratising access to alternative investments through distribution channels. These plat - forms can facilitate fractional ownership and smaller minimum investments, but managers will want to con - sider carefully the appropriate limitations around sales efforts in the hands of third parties. Finally, 2025 is witnessing an uplift in the use of block - chain technology to tokenise or represent digitally both physical and intangible assets. Tracking and trading these assets may become much easier, but whether that is a benefit to many alternative strategies remains to be seen. In addition, the speed of adop - tion of these technologies has raised concern over compliance with existing laws and regulations, and has generated a surge of interest from legislators and regulators. “Retailisation”/democratisation High net worth investors present an opportunity for alternative fund managers facing challenges in insti - tutional fundraising, particularly as the economy has not been kind to traditional 60/40 stock/bond portfo - lios, and the most recent trend is that these investors (and their advisers) are driving demand for alternative investments. The widely held view is that financial advisers to wealthy individuals have offered portfolios that are significantly underweight in alternatives, lead - ing to an increased demand for both new products and distribution.

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INTRODUCTION Contributed by: Elizabeth Shea Fries, Sidley Austin LLP

Distribution opportunities arise through fintech or other platforms. In some cases, an existing fund is offered (directly or by means of an access/feeder fund) with less control by the manager over the sales and investor communication process. Alternatively, managers create new products, such as registered interval funds, BDCs, ELTIFs or Luxembourg Part II UCI Funds, that may not be subject to the same regu - latory regime as purely retail products but are more regulated than alternative funds. Managers must con - sider the relative benefits, costs and risks of these differing approaches. Regulators are also considering these issues, and we can expect additional regulatory focus through new requirements, enforcement action, or both. Fund and fee/expense structures A continuing trend is the increasing creativity employed when establishing investment strategies, when struc - turing funds, and when executing on investment pro - grammes. Exchange-traded funds (ETFs) are now offering private credit and other strategies. Managers are engaging in joint venture arrangements globally to link the ability to administer or distribute a product with the ability to manage an alternative strategy. In the USA, many of these joint ventures are focused on bank-maintained “collective investment trusts” that can be made available to benefit plan investors, including 401(k) plans (but not individual retirement accounts). Target date and other multi-asset strate - gies are increasingly incorporating a less liquid strat - egy as part of a long-term investment plan. Managers are also offering co-investments (directly or through co-investment funds) and offering tai - lored fees and services (including separate account management). Fees and expenses remain an area of focus, both as investors seek to target better net returns and as regulators focus on transparency. Even in a regulatory environment focused on deregulation, supervision and enforcement of basic disclosure and conflict of interest considerations remain paramount. Given increasing costs, expenses continue to be passed through (including manager costs such as internal legal and accounting, and the use of affili - ated service providers) subject to regulatory focus on clear authorisation, proper calculation and transparent

reporting. The multi-strategy “pass-through” model has produced some of the strongest returns in recent years, with the pass-through model offering both the opportunity to compete for talented investment teams and the ability to develop or acquire and deploy inno - vative technologies that can enhance investment and operations. Co-investments Co-investment opportunities remain a popular strat - egy to attract investors and lower investors’ overall costs. Managers in this context must be attentive to appropriate tax and legal structures and whether to create a vehicle and/or run a formal programme, as well as to disclosure of conflicts of interest both to the co-investors and the main fund investors, which requires anticipation of issues when raising a closed- end fund. Navigating co-investment opportunities requires clear communication, transparency and a thorough understanding of the legal and regulatory implications to manage relationships with investors successfully and avoid regulatory issues. ESG considerations Europe remains ahead in pursing ESG principles and in related regulation. In the USA, the issue has largely faded in the wake of other political priorities. Man - agers continue to struggle with the accessibility and reliability of ESG-related data, and key themes include ensuring a manager is doing what it has said it would do from an ESG perspective. Here too, regulators in the USA and Europe have pursued enforcement and litigation claims. Regulation and compliance As the markets and technology are accelerating, so too is the regulatory environment. In Europe, AIFMD2 is required to be implemented into member state law by April 2026. Amongst other things, it recognises loan origination as a core activity of an alternative investment fund manager. There is no pan-EU lend - ing passport as such, but there is some expectation that it will be easier to make loans on a cross-border EU basis with these new permissions. In the prior US administration, SEC rule-making (some of which has been rejected by the courts) had been a focus. Today, the SEC and other regulators are still

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INTRODUCTION Contributed by: Elizabeth Shea Fries, Sidley Austin LLP

seeking to enforce principles through litigation and enforcement actions, but are also looking for alterna - tive means of providing guidance to managers and funds (through no-action letters, interpretations and exemptive relief). Numerous other regulatory issues affect managers and funds, including: • review of merger transactions by the US Federal Trade Commission and the US Department of Jus - tice as well as non-US antitrust agencies; • increasingly stringent anti-money laundering and ‘know your customer’ requirements; • the Committee on Foreign Investment in the United States and foreign direct investment requirements; and • beneficial ownership reporting under Sections 13(d) and 13(g) of the US Securities Exchange Act of 1934, as amended. Furthermore, numerous other global regulations that are pending or have recently been adopted are increasing the regulatory and compliance obligations for alternative investment funds and their managers. Where to organise/operate? In this environment, the selection of a jurisdiction in which to organise and operate a manager and its funds is increasingly important. This Practice Guide is designed to give an overview of various jurisdictions and provide a broad overview of key considerations. At the highest level, a prospective fund manager will want to consider both the investment strategy and expected jurisdiction of portfolio investments, and

the location and type of prospective investors. Cer - tain strategies, such as private credit, entail significant tax considerations, and careful planning is essential. Increasingly, the regulatory regimes in which a manger and its funds operate and invest generate compliance costs and restrictions requiring detailed legal analysis. Carefully tailoring jurisdictional choices to the needs of the business and investors, rather than relying exclu - sively on past practice or trends, is essential to build - ing a successful alternative investments business. GP stakes and other transactions or partnerships This environment has proven rewarding for larger and more established managers (and well-credentialled new managers/spin-outs). Accordingly, the industry is seeing more consolidations and acquisitions of man - agers, with banks and other traditional asset manag - ers acquiring teams and capabilities, including on a cross-border basis. There is also increased activity in the global “GP stakes” markets, where managers can sell a portion of the firm and general partner (hence the term “GP stakes”) and raise additional capital for new initiatives, secure anchor investments for their funds/strategies or facilitate a generational transition of the firm. In some cases, a GP stakes or other third- party investor can also provide strategic guidance or access to new channels for distribution or investing. Strategic partnerships are emerging as a new strategy to couple alternative investing strategies with retail or high net worth distribution capabilities, and more tra - ditional portfolios. These transactions require careful structuring and negotiation but can offer opportunities for alternative fund managers seeking to plan for the future in an increasingly competitive and fast-moving environment.

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AUSTRALIA

Australia

Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella Holding Redlich

Sydney

Tasmania

Contents 1. General p.11 1.1 General Overview of Jurisdiction p.11 1.2 Key Trends p.11 2. Funds p.12 2.1 Types of Alternative Funds and Structures p.12 2.2 Regulatory Regime for Funds p.12 2.3 Disclosure/Reporting Requirements p.13 2.4 Tax Regime for Funds p.13 2.5 Loan Origination p.14 2.6 Non-Traditional Assets p.14 2.7 Use of Subsidiaries for Investment Purposes p.14 2.8 Local/Presence Requirements for Funds p.14 2.9 Rules Concerning Service Providers p.15 2.10 Anticipated Changes for Funds p.15 3. Fund Managers p.16 3.1 Origin of Promoters/Sponsors of Alternative Funds p.16 3.2 Legal Structures Used by Managers p.16 3.3 Regulatory Regime for Managers p.16 3.4 Tax Regime for Managers p.17 3.5 Rules Concerning Permanent Establishments p.17 3.6 Taxation of Carried Interest p.18 3.7 Outsourcing of Investment Functions/Business Operations p.18 3.8 Local Substance Requirements p.18 3.9 Change of Control p.18 3.10 AI and Use of Data p.18 3.11 Anticipated Changes for Fund Managers p.20

4. Investors p.20 4.1 Types of Investors in Alternative Funds p.20 4.2 Side Letters p.20 4.3 Marketing of Alternative Funds to Investors p.21 4.4 Rules Concerning Marketing of Alternative Funds p.21 4.5 High Net Worth or Retail Investors p.21 4.6 Private Placements p.22 4.7 Compensation and Placement Agents p.22 4.8 Tax Regime for Investors p.22 4.9 Double Tax Treaties p.23 4.10 Foreign Account Tax Compliance Act (FATCA)/ Common Reporting Standard (CRS) Compliance Regime p.23 4.11 Anti-Money Laundering (AML) and Know Your Customer (KYC) Regime p.24 4.12 Data Security and Privacy for Investors p.25 4.13 Anticipated Changes for Investors p.25

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AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich

Holding Redlich is one of Australia’s leading com - mercial law firms, with more than 200 legal staff across offices in Melbourne, Canberra, Sydney, Bris - bane and Cairns. The firm’s funds practice comprises corporate, tax, and investment funds lawyers who have expertise in establishing and structuring invest -

ment funds, advising on investment mandates, draft - ing and negotiating fund documents, and managing asset acquisitions and disposals, as well as custo - dial arrangements. The team acts for fund sponsors, managers and investors across the full spectrum of alternative fund strategies and structures.

Authors

Andrew Stone is an investment funds and capital markets lawyer at Holding Redlich. He works with asset management groups and investors in the establishment and operation of investment funds across all asset

Andrew Choi is an investment financial services and funds lawyer at Holding Redlich, where he provides financial advice to businesses, platform operators, investment managers, fund sponsors, and

classes, including real estate and infrastructure, public and private equity, and public and private debt. Andrew’s practice includes creating fund and fund-like investment structures, club structures, funds of one, separately managed accounts, exchange-traded funds, co-investments, joint ventures, and other capital partnerships. He also acts on asset-management-related M&A and private market asset transactions.

financial service providers. He draws on deep expertise and experience in the regulation of financial services and provides strategic guidance on the establishment and operation of investment funds across all asset classes, including public and private equity, debt, real estate and infrastructure.

Chris Kinsella is recognised as one of Australia’s leading tax lawyers, with more than 40 years of experience providing strategic tax advice to corporations, boards, business owners, and the Australian Taxation

Dhanushka Jayawardena is a taxation lawyer at Holding Redlich and is a chartered tax adviser, having acted for some of Australia’s largest fund managers. Dhanushka has advised on the establishment of

Office. His practice at Holding Redlich focuses on tax risk and managing tax audits and disputes with the Commissioner of Taxation, having acted both for and against the Commissioner. Chris is accredited as a specialist in dispute resolution with the Law Society of New South Wales and has been recognised as a Leading Individual for Taxation in Australia by the Chambers Asia-Pacific Guide since 2014.

tax-effective multi-tiered structures tailored for domestic and foreign investors from Europe, the USA, and Asia requiring the application of Australia’s AMIT and MIT regimes, comprehensive tax treaty network, and hybrid entity and mismatch rules in designing the most appropriate structure for each investor. He has also advised on the acquisition and divestment of large-scale real estate investments throughout the fund life cycle, which required consideration of Australia’s thin capitalisation rules and stamp duty provisions.

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AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich

Holding Redlich Level 65 25 Martin Place Sydney NSW 2000 Australia Tel: +61 2 8083 0388 Email: inquiries@holdingredlich.com Web: www.holdingredlich.com

1. General 1.1 General Overview of Jurisdiction

withholding tax rates for eligible foreign investors and capital treatment certainty for domestic investors. However, several factors influence the jurisdiction’s attractiveness. Increased scrutiny by the Australian Taxation Office of structures and variations in state- based stamp duties across jurisdictions can materi - ally impact the design of structures and transaction costs, particularly for real estate and infrastructure investments. Victoria’s additional property taxes have reduced its appeal for real estate-focused strategies. 1.2 Key Trends Although the key elements of Australia’s regulatory regime for alternative funds have been in place for more than 20 years, regulatory proposals during 2025 indicate the regime is under refinement. Substantial growth in Australian superannuation funds has also contributed to changes within the Australian capital markets ecosystem, with implications for the alterna - tive funds sector. In early 2025, the Australian Securities and Invest - ments Commission (ASIC) released a discussion paper on the dynamics between Australia’s public and private markets to gather actionable ideas on regulation that could enhance the operation of these markets. The context of the discussion paper was a perception that public markets are not perform - ing as a mechanism of allocating capital efficiently, thus potentially stifling economic growth. ASIC has sought industry feedback and is expected to provide an update in November 2025 (as of 2 October 2025). Tax regulation is tightening as policymakers seek to balance Australia’s competitiveness against an ero -

Australia is an attractive location for alternative funds, managers and investors, with deep capital pools, a skilled financial services workforce and a stable legal and geopolitical environment. For fund sponsors, Australia offers potential expo - sure to the AUD4 trillion superannuation system (as at March 2025) and to significant capital sources via wealth management channels. The 2025 UBS Global Wealth Report ranks Australians as the second wealth - iest in the world, with median wealth of approximately USD270,000 per adult – second only to Luxembourg. In this regard, the wealth of Australians is supported by very high residential property prices. For managers, Australia offers a deep pool of well- trained investment professionals and associated service providers, including fund administrators. For investors, Australia offers a stable geopolitical envi - ronment supported by a transparent legal system. Although relatively small by global standards, the Aus - tralian market presents strong potential for sustained economic growth through an immigration per head of population at a rate that is approximately double that of the UK and the USA, triple that of Germany, and five times that of France. On the tax front, Australia offers a competitive envi - ronment for alternative funds through its attribution managed investment trust (AMIT), managed invest - ment trust (MIT), and corporate collective investment vehicle (CCIV) regimes, which provide concessional

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AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich

sion of the base. New thin capitalisation rules limit - ing interest deductibility when interest cover exceeds 30% of tax EBITDA significantly impact leveraged buyout structures, while proposed foreign resident capital gains tax (CGT) reforms target non-residents disposing of direct or indirect interests in a broadened definition of Australian land. The Australian Taxation Office has intensified scrutiny of MIT structures expressing concerns about arrange - ments that inappropriately restructure existing trust or investment structures to access the concessional MIT withholding tax rates, particularly where restructures lack commercial rationale. Concurrently, the Austral - ian government has deferred measures to extend clean building MIT withholding tax concessions to data centres and warehouses. In view of the ongoing concentration of public markets in Australia, alternative investment strategies are seen as having an important role to play in the Australian economy. The regulatory environment shows tension between maintaining competitiveness and preventing base erosion. It is hoped that regulatory support for the alternative funds industry in Australia will encour - age investment. 2. Funds 2.1 Types of Alternative Funds and Structures Alternative funds are commonly established for real estate, infrastructure, private equity (including venture capital), private credit and hedge fund strategies. Unit trusts are the most typically used structure for alternative funds, as they provide greatest flexibility in relation to permissible investments. They are not subject to restrictions on the asset classes in which the fund may invest in, restrictions on the quantum of such investments, or any rules regarding compulsory diversification of the investment portfolio or the total fund size. Venture capital limited partnerships (VCLPs) and early- stage venture capital limited partnerships (ESVCLPs) are often used for eligible venture capital investments (EVCIs), which excludes investing in entities whose

predominant activities include property development, land ownership, leasing, providing capital to others, and the construction or acquisition of infrastructure. Tax concessions can be applicable to foreign inves - tors in those structures, including an exemption from income tax on profits (both income and capital). CCIVs can also be used, but this structure is far less common. These were seen as an alternative to AMITs by offering the same tax profile but in a corporate setting. As the regime was introduced sometime after AMITs became widely adopted in the Austral - ian funds management industry and it offered fewer other advantages, most fund managers have found it unnecessary to restructure their arrangements into the newer regime or disturb mature holding structures by holding newly established corporate entities. 2.2 Regulatory Regime for Funds Unit Trusts That Are Unregistered Managed Investment Schemes The establishment of a unit trust does not of itself require any regulatory approval, if structured as an unregistered managed investment scheme. Unit Trust Established as a Registered Managed Investment Scheme If a unit trust is to be a registered managed investment scheme, ASIC must consent to the registration. ASIC must register the scheme within 14 days of receiving an application that satisfies the requirements speci - fied by Australian legislation. The trustee of an Australian unit trust must hold an Australian Financial Services Licence (AFSL) or have the benefit of a relevant exemption from the require - ment to hold an AFSL. An application for an AFSL can be lodged with ASIC, which aims to decide 90% of complete applications within 240 days. Licensed trus - tee businesses operate in Australia and can under - take the role of trustee of an Australian unit trust. The investment management function in relation to such a unit trust can be undertaken by a professional invest - ment manager unrelated to the trustee.

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AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich

VCLPs VCLPs must be registered with Innovation and Sci - ence Australia (ISA). ISA must decide an application for registration within 60 days after receiving it. 2.3 Disclosure/Reporting Requirements Unit Trusts That Are Unregistered Managed Investment Schemes There are no mandatory content requirements in rela - tion to the offering of interests in unregistered man - aged investment schemes, provided that interests are only offered to persons who are “wholesale clients”. Offering documents must not contain misleading or deceptive statements (including by omission). Unit Trusts That Are Registered Managed Investment Schemes Interests in registered managed investment schemes offered to retail clients must be offered under a prod - uct disclosure statement (PDS). By contrast, interests in such schemes that are only offered to wholesale clients are not required to be offered under a PDS. The content of a PDS is mandated under the Australian Corporations Act. It must disclose the rights, terms, conditions and obligations attaching to the interest, the significant taxation implications of such interest, and the fees and costs of the interest. PDSs are not required to be made publicly available but must be provided to all investors who acquire an interest in the relevant fund, before they acquire the interest. Notice that the PDS in use must also be provided to ASIC. VCLPs Primarily for commercial reasons, limited partnership interests are typically offered only to investors that are wholesale clients. Wholesale Client and Retail Client Test A person is considered a wholesale client if: • the minimum amount payable for the relevant inter - est is at least AUD500,000; or • they give the manager a certificate from a qualified accountant no more than six months before the offer is made certifying that the person has: (a) net assets of at least AUD2.5 million; or

(b) a gross income for the previous two financial years of at least AUD250,000. If a person is not a wholesale client, they are generally

deemed to be a retail client. 2.4 Tax Regime for Funds

Australia’s alternative fund taxation operates primarily through flow-through treatment, where trust income and gains are taxed at the investor level rather than

at the fund level. Taxation of MITs

Trusts qualifying as MITs must be managed by an AFSL holder, must be widely held (not closely held), and cannot control trading businesses. Qualifying MITs benefit from a 15% concessional withholding tax on distributions to foreign investors and deemed capital gains treatment thereby enabling the CGT dis - count for eligible Australian residents. Taxation of AMITs The AMIT regime adds to the benefits already afford - ed to MITs and provides enhanced flexibility through attribution-based taxation, rather than traditional dis - tribution-based approaches. Under the AMIT rules, investors are taxed on income attributed to them on a “fair and reasonable basis” annually, regardless of actual distributions received. This framework elimi - nates streaming issues and provides greater certain - ty for fund managers in allocating different classes of income to investors. The trust itself bears no tax liability, provided all taxable income is attributed to investors – creating operational efficiencies for com - plex fund structures. Taxation of VCLPs and ESVCLPs VCLPs provide flow-through taxation with full CGT exemption for eligible foreign venture capital partners on gains from EVCIs. ESVCLPs offer additional ben - efits, including non-refundable 10% tax offsets, rev - enue gain exemptions on EVCI disposals, and income exemptions for limited partners of Australian-resident

general partners. Taxation of CCIVs

CCIVs receive AMIT-equivalent tax treatment, with flow-through taxation for investors in sub-funds.

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AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich

2.5 Loan Origination Funds are permitted to originate loans, except for funds structured as a VCLP or as an ESVCLP. The trustee and investment manager of a fund originating loans made to consumers may need to hold an Aus - tralian Credit Licence. Trustees offering fund interests under the terms of a product disclosure statement should refer to ASIC’s Regulatory Guide 45 Mortgage schemes: Improving disclosure for retail investors (“RG 45”). 2.6 Non-Traditional Assets Funds can invest in non-traditional assets such as digital assets, consumer credit and other loan portfo - lios, cannabis and cannabis-related investments, and litigation funding – provided that: • funds structured as unregistered managed invest - ment schemes that are MITs do not control a trad - ing business; and • funds structured as VCLPs or ESVCLPs cannot engage in lending. Cannabis Investing in cannabis-related businesses is permis - sible, provided those businesses are appropriately licensed and cultivate, produce and distribute canna - bis for medicinal and research purposes only. Invest - ments in non-compliant businesses could risk the fund breaching proceeds of crime legislation or risk the operator breaching applicable fiduciary and regu - latory obligations. Careful due diligence and monitoring of cannabis- related investments are essential to funds investing in the sector. Litigation Funding Litigation funding is typically conducted through a pooled vehicle. Investors contribute capital to that vehicle, which is then deployed under contracts with or on behalf of claimants. These contracts entitle the vehicle to a share of relevant proceeds from the litiga - tion (if any). Investors then receive distributions from the vehicle. If the vehicle is a managed investment scheme, it must comply with applicable statutory obli - gations.

In December 2022, the Australian government announced the commencement of new litigation fund - ing regulations, the Corporations Amendment (Litiga - tion Funding) Regulations 2022 (Cth). These regula - tions clarify that relevant litigation funding schemes are exempt from the managed investment scheme, AFSL, product disclosure and anti-hawking provisions of the Corporations Act. In December 2022, ASIC also provided regulatory relief applicable to litigation funding arrangements and proof of debt arrangements and to litigation funding arrangements where the members wholly or substan - tially fund their legal costs under a conditional costs agreement. The relief expires on 31 January 2026, unless extended by ASIC. 2.7 Use of Subsidiaries for Investment Purposes Subsidiary funds can be used to segregate pools of assets held by the parent fund. The trustee of a parent fund may issue classes of units in the parent fund to investors – the economic features of which are refer - able to the performance of the applicable subsidiary fund. This approach is intended to ring-fence the rights and obligations of the subsidiary fund from those of other subsidiary funds and to provide an economic exposure to the subsidiary fund by the unit holder of the relevant class in the parent fund. Where subsidiaries are used, the subsidiary itself should maintain the same tax profile of the holding entity to prevent an erosion of any tax advantages available at the holding-entity level. 2.8 Local/Presence Requirements for Funds There is no requirement to have an Australian-dom - iciled investment manager to manage an Australi - an-domiciled fund, provided the manager satisfies applicable Australian financial services licensing obli - gations. This may require the manager to obtain regu - latory relief from ASIC. Professional Australian trustee companies may be engaged to act as trustee of an unregistered man - aged investment scheme or as responsible entity of a registered managed investment scheme.

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AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich

If a fund sponsor wishes to establish an Australian entity as manager or as trustee of an unregistered managed investment scheme, then an Australian proprietary limited company would typically be estab - lished. At least one director of such a company must live in Australia. Responsible entities of registered managed investment schemes must be Australian public companies. At least two directors of an Aus - tralian public company must normally live in Australia. All directors must apply for and obtain a director ID before their appointment. Funds proposing to register in Australia as a VCLP or an ESVCLP must ensure that all general partners of the fund are residents of Australia or of a foreign country with which Australia has a double tax agree - ment in force. If a fund wishes to obtain the benefits of the Austral - ian MIT regime, an entity holding an AFSL must be engaged. 2.9 Rules Concerning Service Providers In general, there are no restrictions on the choice or location of service providers. However, a party wishing to engage with the trustee of an unregistered managed investment scheme or with a general partner of a VCLP or an ESVCLP or with the responsible entity of a registered managed investment scheme should ensure that the trust deed or partner - ship agreement (as applicable) contains appropriate drafting to permit such an engagement. Importantly, Australian law deems that – for the pur - poses of determining whether there is a liability to members of a registered managed investment scheme – the responsible entity of the scheme is taken to have done (or not done) anything that any service provider appointed by the responsible entity has done. In relation to custodial services, Australian-domiciled custodians generally require an AFSL, subject to lim - ited exceptions. Entities subject to Australian AML laws must ensure compliance with those laws, regardless of whether

any third-party providers are engaged to assist with KYC or other obligations. 2.10 Anticipated Changes for Funds Private Capital Market Governance ASIC has indicated that in November 2025, it will issue six guidance documents relevant to alternative funds: • ASIC report on Australia’s evolving capital markets; • ASIC report on private credit surveillance; • expert report on the future state of Australia’s capi - tal markets; • expert report on international comparison of data reporting and transparency in private markets; • guiding principles for the private credit industry; and • catalogue of regulatory guidance for the funds management sector. ASIC has also indicated that these updates may include requirements relating to: • disclosure of fund leverage and liquidity risk man - agement; • valuations, including obtaining and reporting independent loan valuations, with information on frequency, methodology and beneficiary; • terminology used by the fund sponsor in relation to the features of the fund; • remuneration and fees to make readily observable the true cost of managing the fund; • related-party transactions; and • conflicts management, including both conflicts of interest and conflicts of duty (including duty-duty conflicts of any counterparty to an AFSL holder). It is anticipated that the updates will be relevant to the compliance, governance and some aspects of the operating processes of alternative fund managers. In response, alternative fund managers are preparing to update their processes accordingly. Digital Assets In September 2025, the Australian government released draft legislation in relation to digital assets. The proposed changes introduce two new finan - cial products within the Corporations Act – namely,

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a “digital asset platform” and a “tokenised custody platform”. Persons providing relevant financial services in rela - tion to these new financial products will be required to hold an AFSL authorising them to do so. The gen - eral obligations applying to the AFSL holder will be relevant, including: • providing the services efficiently, honestly and fairly; • having in place adequate arrangements for the management of conflicts of interest; • having available adequate resources to provide the services; and • being subject to enforcement by ASIC. In addition to the general obligations, the draft legisla - tion proposes specific obligations to issuers of digi - tal asset platforms and tokenised custody platforms, including: • minimum standards made by ASIC for asset- holding functions and transactional and settlement functions; • platform rules that deal with activities or conduct of persons in relation to the platform; and • tailored disclosure obligations, including the requirement to give clients a Digital Asset Platform Guide or Tokenised Custody Platform Guide as a substitute for a product disclosure statement. 3. Fund Managers 3.1 Origin of Promoters/Sponsors of Alternative Funds Promoters or sponsors of alternative funds estab - lished in Australia typically come from Australia. To assist non-Australian promoters and sponsors, spe - cific Australian regulatory relief is available on applica - tion to ASIC, subject to the regulator’s approval. This relief is targeted at promoters or sponsors regulated in the UK, the USA, Singapore, Hong Kong, Germany and Luxembourg who wish to do business in Australia. Promoters or sponsors from other jurisdictions may also apply to ASIC for regulatory relief.

Australian placement agents and similar capital- sourcing partners (including Australian feeder fund operators) operate in Australia and assist foreign fund promoters and sponsors in a range of contexts. 3.2 Legal Structures Used by Managers Unit trusts are the most commonly used legal struc - ture by alternative fund managers in Australia, owing to their flexibility both in capital arrangements and permissible investments. They are widely used for real asset strategies, hedge strategies and credit strate - gies. VCLPs and ESVCLPs are also commonly used for venture capital strategies raising capital from foreign investors. This is due to the full CGT exemption for tax-exempt foreign residents or foreign venture capital funds on gains derived from the disposal of eligible venture capital investments. Individual personnel compensation or equity incentive arrangements can be accommodated regardless of the chosen fund structure. 3.3 Regulatory Regime for Managers There is an extensive regulatory regime applicable to alternative fund managers in Australia. Alternative fund managers should consider whether they require an AFSL or whether they can rely on an exemption from that requirement. Some examples of exemptions are referenced in 3.1 Origin of Promoters/ Sponsors of Alternative Funds . If an AFSL is required, managers will typically need an authorisation to (at least) “advise” and “deal” in all the financial products relevant to the investment strategy for which the manager has responsibility. In addition, managers will need to consider broader obli - gations under corporations legislation, trust law, AML laws, competition law, foreign investment regulations, privacy laws, sanctions regimes and taxation laws, among other regulatory laws. Trustees of funds owe fiduciary obligations to fund investors. The full scope of those obligations is typi - cally sought to be attenuated through the constituent

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